IJM Corp has received a conditional voluntary take-over offer from Sunway to acquire all ordinary shares in IJM for RM3.15 per share. The consideration will be satisfied with 10% in cash and the remaining 90% in new Sunway shares to be issued at RM5.65 each.
“The offer price represents a 14.6% premium to IJM’s last closing share price of RM2.75, valuing the group at RM11 bil based on our FY26F forecast,” said Kenanga.
The proposal is conditional upon the offeror securing no less than 50% of IJM’s total issued shares, which hinges on the stance of majority-holding institutional Bumiputera and government-linked investment companies.
While the proposed merger is synergistic in the long term, the proposal is still dependent on institutional Bumiputera firms and government-linked investment companies collectively hold more than half of IJM’s shares which might prefer higher cash portion or better price.
“That said, we view the offer positively and we believe that it will provide IJM investors with a path to benefit from the combined group’s growth and business diversification,” said Kenanga, maintaining the Outperform call on IJM.
The offer price of RM3.15 per share will be satisfied with 10% in cash and the remaining 90% in new Sunway shares to be issued at RM5.65 each.
For illustrative purposes, a holder of 1,000 IJM shares will receive a cash payment of RM315 and 501 new Sunway shares. The proposed offer is subject to approval by shareholders at an EGM to be convened.
It is also conditional upon Sunway securing valid acceptances that would result in its ownership of more than 50% of IJM’s voting shares before the offer closes. Sunway does not intend to maintain the listing status of IJM if the shareholding rises to 75% and will invoke its rights to compulsory acquisition once its control crosses the 90% mark.
“Given that institutional Bumiputera firms and government-linked investment companies collectively hold more than half of IJM’s shares, we believe achieving an unconditional offer will hinge on their stance,” said Kenanga.
The proposed offer aims to create a leading Malaysian property and construction conglomerate with the scale to compete regionally. The combined entity would hold a massive landbank with potential GDV reaching RM118 bil and an enlarged order book of RM13 bil.
The group would achieve significant financial heft. This enhanced profile is likely to attract greater investor interest and secure lower financing costs due to its larger market capitalisation and stronger credit profile. —Jan 13, 2025
Main image: Sunway Group
